General Motors Reinstates Dividend - Analyst Blog
January 15 2014 - 2:50PM
Zacks
General Motors Company (GM) has finally
reinstated its quarterly dividend, which was discontinued in 2008.
The company announced a quarterly dividend of 30 cents per share,
payable on Mar 28, 2014, to shareholders of record as of Mar 18,
2014.
The quarterly dividend translates into an annual dividend yield
of about 3%, based on the closing share price of $40.02 as of Jan
14, 2014. The reintroduction of its dividend was highly awaited by
investors, now that General Motors is free from government
shareholding and is generating positive cash flows.
The announcement resulted in a 1.5% increase in General Motors’
share price to $40.16.
The reinstatement of dividend came on the back of General
Motors’ strong balance sheet, stable earnings, high cash flows and
ample liquidity. The automaker has more or less recovered from the
effect of the recession and bankruptcy and has completed 15
consecutive quarters of profitable operations. The fourth quarter
of 2013, whose results are scheduled to be announced before the
market opens on Feb 6, 2014, is expected to be the 16th
profitable quarter.
The cash flows of General Motors have also improved. During the
third quarter of 2013, the company had a net cash flow of $3.3
billion from automotive operations, up from $3.1 billion in the
year-ago period.
The company now intends to build a strong balance sheet that can
provide ample returns to shareholders as well as endure the impact
of any economic weakness.
General Motors’ peer, Ford Motor Co. (F),
recently increased its dividend for the first quarter of 2014 by
25% to 12.5 cents per share. The new dividend will be paid on Mar
3, 2014 to holders of the outstanding Class B and common stock. The
record date for the quarterly dividend is Jan 31, 2014. The
increase amounts to a dividend yield of 3.2% per annum, based on
the closing share price of $15.84 as of Jan 9, 2014.
General Motors, which carries a Zacks Rank #3 (Hold), is one of
the largest automobile producers in the world along with Ford,
Honda Motor Co., Ltd. (HMC) and Toyota
Motor Corporation (TM).
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
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